SENATE BILL 561

51st legislature - STATE OF NEW MEXICO - first session, 2013

INTRODUCED BY

John M. Sapien

AN ACT

RELATING TO TAXATION; PROVIDING DEFINITIONS OF "CONSUMED", "MANUFACTURING", "QUALIFIED BUSINESS" AND "TANGIBLE PERSONAL PROPERTY" FOR PURPOSES OF THE DEDUCTION OF GROSS RECEIPTS FROM SALES TO MANUFACTURERS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. Section 7-9-46 NMSA 1978 (being Laws 1969, Chapter 144, Section 36, as amended) is amended to read:

     "7-9-46. DEDUCTION--GROSS RECEIPTS TAX--GOVERNMENTAL GROSS RECEIPTS--SALES TO MANUFACTURERS.--

          A. Receipts from selling tangible personal property may be deducted from gross receipts or from governmental gross receipts if the sale is made to a person engaged in the business of manufacturing who delivers a nontaxable transaction certificate to the seller. The buyer delivering the nontaxable transaction certificate must incorporate the tangible personal property as an ingredient or component part of the product that the buyer is in the business of manufacturing.

          B. Receipts from selling tangible personal property that is used in such a way that it is consumed in the manufacturing process of a product, provided that the tangible personal property is not a tool or equipment used to create the manufactured product, to a [person] qualified business engaged in [the business of] manufacturing that product and [who] that delivers a nontaxable transaction certificate to the seller may be deducted in the following percentages from gross receipts or from governmental gross receipts:

                (1) twenty percent of receipts received prior to January 1, 2014;

                (2) forty percent of receipts received in calendar year 2014;

                (3) sixty percent of receipts received in calendar year 2015;

                (4) eighty percent of receipts received in calendar year 2016; and

                (5) one hundred percent of receipts received on or after January 1, 2017.

          C. The purpose of the deductions provided in this section is to encourage manufacturing businesses to locate in New Mexico and to reduce the tax burden, including reducing pyramiding, on the tangible personal property that is consumed in the manufacturing process and that is purchased by manufacturing businesses in New Mexico.

          D. The department shall annually report to the revenue stabilization and tax policy committee the aggregate amount of deductions taken pursuant to this section, the number of taxpayers claiming each of the deductions and any other information that is necessary to determine that the deductions are performing the purposes for which they are enacted.

          E. A taxpayer deducting gross receipts pursuant to this section shall report the amount deducted separately for each deduction provided in this section and attribute the amount of the deduction to the appropriate authorization provided in this section in a manner required by the department that facilitates the evaluation by the legislature of the benefit to the state of these deductions.

          F. As used in this section:

                (1) "consumed" means incorporated into, utilized, depleted, destroyed or transferred in the process of manufacturing a product;

                (2) "manufacturing" means the process of combining, processing or converting raw material, substances or components into new products through mechanical, physical or chemical transformation;  

                (3) "qualified business" means a business classified within the manufacturing sector as described in the official 2012 North American industry classification system; and

                (4) "tangible personal property" includes chemicals, dyes, electricity, fuels, gases, jigs, manufacturing aids and supplies, repair parts, spares and water."

     SECTION 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2013."

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